Equity Method of Accounting
On 19 September 2024 the International Accounting Standards Board (IASB) published the Exposure Draft IASB/ED/2024/7Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202x).
IASB’s proposals
The IASB’s project objectives are:
- to reduce diversity in practice resulting from applying the equity method as set out in IAS 28 Investments in Associates and Joint Ventures, by applying the principles set out in IAS 28 where possible; and
- to improve the understandability of IAS 28.
To meet its objectives, the IASB sets out in its Exposure Draft (ED) proposed amendments to:
- clarify and add to the requirements in IAS 28;
- reorder the requirements in a more logical and consistent way to help companies with the application of the Standard; and
- improve the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements .
The IASB expects the proposed amendments would also provide users of financial statements with more comparable and useful information.
Alongside the ED, the IASB published a snapshot of the proposals and a series of three webcasts, providing an overview of the ED, the main proposals and the supplementary proposals.
Background
Under IAS 28 Investments in Associates and Joint Ventures and IFRS 11 Joint Arrangements, the equity method of accounting is:
- required in an investor’s consolidated financial statements for investments in associates and joint ventures.
Under IAS 27 Separate Financial Statements, the equity method of accounting is:
- permitted in separate financial statements for investments in subsidiaries, associates and joint ventures.
UKEB outreach
The UKEB outreach on this project included discussions with UKEB Advisory groups and public consultation on the UKEB Draft Comment Letter, which was published on 21 October 2024. The consultation closed on 20 November 2024. The relevant documents are available at the end of this page:
- Draft Comment Letter.
- Invitation to Comment and Your Details forms.
- Responses received from stakeholders.
The UKEB is supportive of the proposals in the ED.
UKEB Final Comment Letter
Thank you to all who have participated in this project.
Consistent with the UKEB Draft Comment Letter, the UKEB Final Comment Letter supports the proposals in the ED. The letter was submitted to the IASB on 16 November 2024, a copy of which can be found below. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.
The relevant documents are available at the end of this page:
- Final Comment Letter.
- Feedback Statement.
Next steps
The IASB will consider feedback received in response to this ED in 2025.
UKEB meetings
UKEB meetings related to the project are as follows:
- 30 January 2025: Final Due Process Compliance Statement (for noting)
- 12 December 2024: Paper 7 - [Draft] Final Comment Letter, [draft] Feedback Statement and [draft] Due Process Compliance Statement
- 17 October 2024: Paper 5 Project Initiation Plan and Draft Comment Letter
- 18 July 2024: Paper 7 IASB General update–Appendix D (Sweep issues identified when drafting the Exposure Draft)
- 26 April 2024: Paper 7 IASB General update–Appendix E
- 24 March 2024: Paper 9 IASB General update–Appendix E
- 14 December 2023: Paper 6 IASB General update–Appendix G
- 16 November 2023: Paper 6 IASB General update–Appendix E
- 19 October 2023: Paper 7 IASB General update–Appendix D
- 21 September 2023: Paper 5 IASB General update–Appendix C
- 18 May 2023: Paper 6 IASB General update–Appendix B
- 27 April 2023: Paper 8 IASB General update - Appendix D
- 16 March 2023: Paper 5 IASB General update–Paragraphs 86-105
- 23 February 2023: Paper 6 IASB General update–Paragraphs 86-99
- 19 January 2023: Paper 5 IASB General update–Paragraphs 65-92
- 17 November 2022: Paper 8 IASB General update–Paragraphs 22-35
- 20 October 2022: Paper 7 IASB General update–Paragraphs 65-68
- 18 July 2022: Paper 4 Other topics–Paragraphs 31-35
- 23 June 2022: Paper 4 Ongoing Monitoring of IASB projects–Appendix 4
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